What Is The Repayment Period In Mudra Loan

The repayment period for a Mudra loan typically ranges from 3 to 7 years, depending on the type of loan and the borrower's repayment capacity.

The Pradhan Mantri MUDRA Yojana (PMMY) was launched by the Government of India to support micro and small enterprises by providing collateral-free loans. While many applicants focus on loan eligibility and interest rates, understanding the repayment period is equally important. In this article, we will explain the repayment tenure for Mudra loans, its flexibility, and how it varies with loan type and purpose.

What is the Repayment Period for Mudra Loan?

Under the PMMY scheme, the repayment period typically ranges between 3 to 7 years, including a possible moratorium period of up to 6 months. The exact tenure depends on the type of Mudra loan availed — Shishu, Kishore, or Tarun, the business plan, and the lending institution’s guidelines.

*Note: For larger loans under the Tarun category, some banks may offer tenure slightly beyond 5 years based on business viability.

Factors Affecting Mudra Loan Repayment Tenure

1. Nature of Business:
   Manufacturing and service-based businesses might get longer tenures than trading businesses due to different cash flow cycles.

2. Loan Amount:
   Higher loan amounts under Kishore and Tarun categories often come with extended repayment schedules.

3. Bank’s Assessment:
   The repayment period is finalized after evaluating the borrower's creditworthiness, income projections, and business plan.

4. Moratorium Period:
   Borrowers may get up to 6 months of moratorium (i.e., repayment holiday), especially in project-based funding.

Understanding the Mudra loan repayment period is essential before applying under Shishu, Kishor, or Tarun categories. With flexible tenures of up to 5 years and a moratorium period, PMMY makes it easier for micro and small businesses to manage cash flows and grow.